Is Callaway Going To Be A Boom Stock?

In their latest episode of the VALUE: After Hours Podcast, Taylor, Brewster, and Carlisle discuss Is Callaway Going To Be A Boom Stock? Here’s an excerpt from the episode:

Bill: Real quick. I was thinking about Callaway.

Tobias: We’re doing legit time. Callaway’s going to be boom stock when the socialist Utopia hits.

Jake: Yeah, when it’s all robots doing the real work, we all can just golf all day.

Bill: Yeah, well, I’m a rip through this one and then I’d rather talk to you guys about Buffett and repurchases. I just got a new driver and a new 3-wood. They’re crazy expensive, but they are pretty freaking good and I resisted, I mean played with my old driver for 11 years. I’m not this new golf club type guy. I was thinking to myself I was like, “Wow, Callaway might have a real upgrade cycle.”

You’ve got people that can move to the Sunbelt a little bit more, you’ve got to step up and demand. They own top golf, which I actually think is a pretty good product and a good distribution system for Callaway golf clubs. They own this Travis Matthew brand, then I was like, “I just don’t know. It’d have to be so cheap, because what’s your reinvestment runway at the end of your holding period.” I just don’t think that they really have a long runway because at the end of the day, I do think golf is in secular decline even if it gets a bump, a step up from this.

Jake: Do young people like golf relative to their parents?

Bill: I can’t say. I don’t think.

Tobias: Is golfing in secular– I don’t know that.

Bill: Yeah. It takes too long.

Jake: It is.

Tobias: Yeah.

Jake: Yeah. Our attention spans are not golf.

Tobias: It’s not like a Tiger Woods thing.

Bill: Same with horse racing, horse racing is dead. I think it’s because you have to wait between every race. Nobody wants to do that.

Jake: Robot versus–

Bill: I acknowledge it’s different, but I think it suffers from similar trends. Anyway, I don’t know. I got to the point. It’s like I get to with Russia. It would have to be screamingly, screamingly cheap, except I wouldn’t mind making money on– [crosstalk] What?

Jake: [crosstalk] cheap like it was a net-net back in the day [crosstalk] was my portfolio.

Tobias: A few of the golf names got net-net cheap, I think.

Jake: Yeah.

Bill: Yeah. I don’t even know if I’d want it then.

Jake: [laughs]

Bill: I don’t know. I think it would take a lot.

Tobias: it’s a nice brand.

Bill: Because here’s what I was thinking.

Tobias: If you’re not paying for the brand, if you just paying for the working capital, that’s all right.

Jake: Yeah.

Bill: Well, when was it a net-net?

Jake: 2010?

Tobias: Oh, it’s 15 years something like that.

Bill: Yes. So, what’s the opportunity cost of buying a net-net in that environment?

Tobias: Yeah, but walk around with the Callaway golf shirt on and [crosstalk]

Bill: You should have bought Google.

Jake: Well, of course.

Tobias: Yeah. Then you would be retired and playing golf.

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